CARLISLE COMPANIES INC

Carlisle Companies Incorporated is a leading supplier of innovative building envelope products and solutions for more energy-efficient buildings. The company operates through two reportable segments: Carlisle Construction Materials (CCM) and Carlisle Weatherproofing Technologies (CWT). CCM manufactures premium single-ply roofing products including EPDM, TPO, and PVC membranes, polyiso insulation, and engineered metal roofing systems primarily for the commercial construction market. CWT produces high-performance waterproofing, moisture protection products, air and vapor barriers, spray polyurethane foam, and expanded polystyrene insulation for both commercial and residential applications. The building envelope industry is shaped by mega trends around energy efficiency, labor savings, and the re-roofing cycle, with the built environment estimated to contribute as much as 30% of annual greenhouse gas emissions. Carlisle's Vision 2030 strategic plan leverages these trends to generate above-market growth through innovation, the Carlisle Experience, and the Carlisle Operating System (COS), a continuous improvement process based on lean enterprise and six sigma principles.

Carlisle competes as one of four major manufacturers in the single-ply roofing industry, competing through innovative products, long-term warranties, and customer service. In the weatherproofing technologies market, CWT competes as a leader in air and vapor barriers, waterproofing, spray foam, and other insulation solutions, facing competition from numerous local or regional competitors. The company's competitive advantages include its proprietary differentiated products, the Carlisle Experience delivery model, and COS-driven operational efficiencies. In 2025, CCM's two largest customers represented 33% of the company's consolidated revenues. Revenues from QXO, Inc. and Beacon Roofing Supply, Inc. accounted for approximately 16.7% ¹ of consolidated revenues in 2025, while revenues from ABC Supply Co. accounted for approximately 16.3% ² of consolidated revenues in the same period.

Carlisle generates revenue primarily through the manufacture and sale of building envelope products and solutions. Revenue is recognized when control of goods transfers to the customer, typically upon shipment or delivery. The company also offers separately priced extended warranty contracts on certain products, with terms ranging from five to 40 years ³, for which revenue is deferred and recognized on a straight-line basis over the contract life. The weighted-average life of these extended warranty contracts as of December 31, 2025 is approximately 20 years ⁴. The majority of CCM's products are sold through a network of authorized sales representatives and distributors in North America and Europe, while CWT's products are sold through distribution and retail outlets throughout North America. The company's customer base is diverse but concentrated, with two large distributors representing a significant portion of revenues.

The CCM segment produces a complete line of premium single-ply roofing products including EPDM, TPO, and PVC membrane, polyisocyanurate insulation, and engineered metal roofing and wall panel systems. These products are sold under brands including Carlisle SynTec, Versico, Weatherbond, and Hunter Panels in the United States and worldwide, and under Resitrix and Hertalan brands primarily in Europe. CCM operates manufacturing facilities throughout the United States, Germany, the Netherlands, the United Kingdom, and Romania. In 2025, CCM generated revenues of $3,721.7 million ⁵ and segment operating income of $997.2 million ⁶, with an operating margin of 26.8% ⁷. The segment's adjusted EBITDA was $1,087.0 million ⁸ with an adjusted EBITDA margin of 29.2% ⁹. CCM's revenue increase in 2025 was primarily driven by strong re-roofing activity aided by the MTL acquisition, partially offset by lower new construction activity.

The CWT segment produces building envelope solutions including high-performance waterproofing and moisture protection products, protective roofing underlayments, integrated air and vapor barriers, spray polyurethane foam and coating systems, block-molded expanded polystyrene insulation, and engineered products for HVAC applications. CWT operates manufacturing facilities and distribution locations throughout the United States and Canada. In 2025, CWT generated revenues of $1,298.2 million ¹⁰ and segment operating income of $101.9 million ¹¹, with an operating margin of 7.8% ¹². The segment's adjusted EBITDA was $224.8 million ¹³ with an adjusted EBITDA margin of 17.3% ¹⁴. CWT's revenue decrease in 2025 was primarily the result of lower sales volumes due to continued softness in new construction activity, mostly offset by the acquisitions of PFB, ThermaFoam, and Bonded Logic.

During 2025, Carlisle completed several acquisitions. On February 3, 2025, the company acquired selected assets of ThermaFoam Operating LLC, PowerFoam LLC, and ThermaFoam Real Estate LLC for cash consideration of $53.7 million ¹⁵. On June 30, 2025, the company acquired selected assets of Bonded Logic, Inc. and Phoenix Fibers, LLC for cash consideration of $61.4 million ¹⁶. The company also completed the acquisition of PFB Holdco, Inc. on December 18, 2024 for cash consideration of $266.5 million ¹⁷ and MTL Holdings LLC on May 1, 2024 for cash consideration of $424.6 million ¹⁸. On August 20, 2025, Carlisle issued $500.0 million ¹⁹ of 5.55% senior notes due 2040 and $500.0 million ²⁰ of 5.25% senior notes due 2035. The company repurchased $1,300.0 million ²¹ of common stock during 2025. On September 3, 2025, the Board of Directors approved the repurchase of an additional 7.5 million ²² shares under the company's share repurchase program. The company paid dividends of $181.1 million ²³ in 2025, and on January 28, 2026, the Board declared a regular quarterly dividend of $1.10 per share ²⁴.

Carlisle's total revenues for 2025 were $5,019.9 million ²⁵, compared to $5,003.6 million ²⁶ in 2024, representing an increase of $16.3 million ²⁷ or 0.3% ²⁸. Operating income was $1,002.5 million ²⁹ in 2025 versus $1,143.1 million ³⁰ in 2024, with operating margin declining to 20.0% ³¹ from 22.8% ³². Income from continuing operations was $742.5 million ³³ in 2025 compared to $865.1 million ³⁴ in 2024. Diluted earnings per share from continuing operations were $17.16 ³⁵ in 2025 versus $18.34 ³⁶ in 2024. Adjusted EBITDA was $1,225.4 million ³⁷ in 2025 compared to $1,332.7 million ³⁸ in 2024, with adjusted EBITDA margin declining to 24.4% ³⁹ from 26.6% ⁴⁰. Net cash provided by operating activities was $1,101.8 million ⁴¹ in 2025, an increase of $71.5 million ⁴² compared to 2024. Gross margin decreased to 35.7% ⁴³ in 2025 from 37.7% ⁴⁴ in 2024, primarily due to increased unit costs resulting from higher absorption of fixed costs on lower volumes.

Carlisle's Vision 2030 strategic plan focuses on driving above-market organic revenue growth through continued investment in innovation. The company is leveraging mega trends around energy efficiency, labor savings, and the re-roofing cycle to generate growth. Key growth initiatives include developing new integrated system solutions across the building envelope, expanding product breadth and geographic reach into architectural metals, and capturing significant aftermarket opportunities as both residential and non-residential buildings need repair and energy-efficiency upgrades. The company intends to continue to seek synergistic acquisitions that will enhance its ability to service customers with a broader set of energy-efficient solutions. Research and development expenses increased to $47.1 million ⁴⁵ in 2025 from $35.4 million ⁴⁶ in 2024, a 33.1% ⁴⁷ increase, consistent with the Vision 2030 pillar of driving innovation through continued investment in new product development.

Carlisle is focused on expanding its presence in niche high-growth and high-margin opportunities including retail product expansion, advanced air, water, and vapor barriers, and enhancement of other building envelope adjacencies. The company plans to drive sales and commercial excellence using system and bundle sales to leverage enhanced product breadth and the Carlisle Experience. At CCM, solid re-roofing demand, which represents approximately 70% ⁴⁸ of the commercial roofing business, continues to help stabilize the business as new construction markets work through the bottom of the cycle. At CWT, recent acquisitions and operational initiatives are positioning the company to capitalize on the growing need for energy-efficient weatherproofing solutions. North America is described as the most attractive building-products market globally, supported by strong long-term fundamentals including the demand for energy-efficient solutions, the need to improve labor productivity, and the recurring maintenance requirements of an aging non-residential building stock, over 70% ⁴⁹ of which is more than 25 years old.

Carlisle expects to maintain best-in-class production, service, and delivery capabilities through the Carlisle Operating System (COS), which is used to consistently drive efficiencies and operating leverage. The company's highly responsive cost structure combined with the discipline of COS and its proven capital allocation framework continues to translate into superior and sustainable margin performance. Management noted that while they expect challenging market conditions to continue into the first half of 2026, the company's solid financial position, robust cash flow, and ongoing commitment to operational excellence enable continued generation of strong returns. The company's proactive approach to continuous improvement initiatives and focus on delivering the Carlisle Experience enables it to maintain resilient margins. Raw materials, including inbound freight, accounted for approximately 66% ⁵⁰ of the company's cost of goods sold in 2025.

Carlisle's operational strategy includes continued investment in automation in its factories to drive operational excellence. The company operates 91 ⁵¹ total facilities, with 82 ⁵² in North America and 9 ⁵³ in Europe, comprising 6.3 million ⁵⁴ square feet of owned space and 3.5 million ⁵⁵ square feet of leased space. As of December 31, 2025, the company employed approximately 5,900 ⁵⁶ people, including approximately 4,800 ⁵⁷ employees in U.S. operations and excluding approximately 300 ⁵⁸ contractors. Approximately 500 ⁵⁹ employees were represented by unions under contracts that expire at varying times. The company maintains a policy of non-discriminatory treatment and respect of human rights for all current and prospective employees and offers several training programs intended to recognize and develop careers across all levels.

Capital allocation priorities include investments in the business, strategic acquisitions, share repurchases, and continued dividend increases. Capital expenditures were $131.2 million ⁶⁰ in 2025 compared to $113.3 million ⁶¹ in 2024. The company has committed to increasing its investment in research and development as part of its Vision 2030 strategy. Share repurchases totaled $1,300.0 million ⁶² in 2025. The company has a share repurchase program with no expiration date, and on September 3, 2025, the Board approved the repurchase of an additional 7.5 million ⁶³ shares. Dividends paid were $181.1 million ⁶⁴ in 2025, and the company has increased its dividend rate annually for the past 49 years ⁶⁵. On January 28, 2026, the Board declared a regular quarterly dividend of $1.10 per share ⁶⁶. The company maintains a $1.0 billion ⁶⁷ Fifth Amended and Restated Credit Agreement with a maturity date of April 3, 2029 ⁶⁸.

Management explicitly flagged that they expect the current challenging market conditions to continue into the first half of 2026. The company faces headwinds from continued softness in new construction activity, which negatively impacted both CCM and CWT segments in 2025. The CCM and CWT segments are susceptible to downturns in the commercial construction industry, particularly in the construction repair and replacement sectors, and the CWT segment is susceptible to downturns in the residential construction industry. The company noted that the M&A environment in 2025 was challenging, which led to turning a significant portion of cash flow to share repurchases. Several market segments the company serves are cyclical and sensitive to domestic and global economic conditions, including manufacturing activity, commercial and residential construction, inflation, deflation, interest rates, tariffs, and credit availability.

Geographic and regulatory constraints include the company's reliance on global sources of raw materials, which could be adversely impacted by unfavorable shipping or trade arrangements, including import and export tariffs and global economic conditions. The company is subject to stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges, and chemical and hazardous waste management. Changes in climate change laws or regulations, including laws relating to GHG emissions, could lead to new or additional investment in the company's products or facilities and could increase environmental compliance expenditures. The company has made public commitments regarding its intended reduction of GHG emissions, including commitments to achieve net zero GHG emissions by 2050 ⁶⁹ and the establishment of science-based targets to reduce GHG emissions from operations and the value chain.

The company faces significant customer concentration risk, as CCM's two largest customers represented 33% ⁷⁰ of consolidated revenues in 2025, and the loss of either customer could have a material adverse effect. Raw material costs are a major risk, with raw materials including inbound freight accounting for approximately 66% ⁷¹ of cost of goods sold in 2025, and these petroleum-based and chemical inputs are subject to volatility that may not be recoverable through price increases. The company's growth strategy depends on acquisitions, and the M&A environment in 2025 was challenging, with no assurance the company can continue to identify and finance suitable acquisitions at reasonable valuations. The Henry trade name within the CWT segment, with an aggregate carrying value of $219.0 million ⁷², was tested for impairment using a quantitative approach and resulted in a fair value that exceeded its carrying value by less than 10% ⁷³, indicating vulnerability to changes in revenue projections or discount rates. The company has committed to achieving net zero GHG emissions by 2050 ⁷⁴, which may require significant resources to achieve, and failure to meet these commitments could result in adverse publicity and reaction from investors and stakeholders.

Management's message emphasizes resilience and continued execution against the Vision 2030 strategy despite headwinds in new construction and a complex economic environment. The tone is confident, stating that management remains 'very confident in our ability to achieve our Vision 2030 financial objectives.' Key themes include progress on all key pillars of Vision 2030: increased investments in innovation to develop new market-leading products, enhanced emphasis on COS and expanded automation in factories to drive operational excellence, addition of significant management talent, and continued elevation of the Carlisle Experience to strengthen customer loyalty and service. Management highlighted that Carlisle delivered another solid year of cash flow, generating over $1 billion of operating cash flow, which continued to provide balance sheet optionality. The three strategic priorities emphasized for the period ahead are: (1) continuing to execute against Vision 2030 with a focus on innovation, the Carlisle Experience, and COS; (2) maintaining a balanced, returns-focused approach to capital deployment including investments in the business, strategic acquisitions, share repurchases, and continued dividend increases; and (3) navigating challenging market conditions expected to continue into the first half of 2026 while leveraging the company's solid financial position, robust cash flow, and ongoing commitment to operational excellence to continue generating strong returns and delivering shareholder value.